DEF 14A of Arbutus Biopharma Corp
Filed Apr 10, 2024 · FY20230001140361-24-019091
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
PROPOSAL NO. 1 – ELECTION OF DIRECTORS Our Board currently consists of seven (7) directors. The term of office of each of the current directors will end immediately before the election of directors at the Annual Meeting. Unless the director’s office is earlier vacated in accordance with the provisions of the BCBCA and our Articles, each director elected will hold office until immediately before the election of new directors at the next annual general meeting of our Shareholders and, if no director is then elected, until a qualified successor is duly elected or appointed. Upon the recommendation of our Corporate Governance and Nominating Committee, our Board has nominated the following individuals to serve until the 2025 Annual General Meeting of Shareholders and until their respective successors are duly elected and qualified: Daniel Burgess, Richard C. Henriques, Keith Manchester, M.D., Michael J. McElhaugh, James Meyers, Melissa V. Rewolinski, Ph.D, and Frank Torti, M.D. Drs. Torti and Manchester were each initially designated as nominees to our Board pursuant to rights Roivant Sciences Ltd. (“Roivant”) had in connection with its ownership of certain of our Preferred Shares. However, such rights expired on October 16, 2021 in connection with the automatic conversion of Preferred Shares held by Roivant into Common Shares. Shareholders may also nominate individuals for election to our Board in accordance with our Articles and the BCBCA, as more fully described below under “Corporate Governance - Director Nominations.” We are not aware that any of our nominees will be unable or unwilling to serve as one of our directors; however, should we become aware of such an occurrence before the election of directors takes place at the Annual Meeting, if the persons named in the accompanying proxy are appointed as proxyholders, it is intended that the discretionary power granted under such proxy will be used by the proxyholders to vote in their discretion for a substitute nominee or nominees. Biographical information and the attributes, skills and experience of each nominee that led our Corporate Governance and Nominating Committee and Board to determine that such nominee should serve as a director are discussed in the “Executive Officer and Directors” section of this Proxy Statement/Circular.
Executive Officers and Director Nominees
Executive Officers and Director Nominees Our executive officers and director nominees, their positions with the Company and their ages as of March 25, 2024, are as follows:
Executive Officers and Director Nominees
| Name | Age | Position(s) | | Michael J. McElhaugh* | 50 | Interim President and Chief Executive Officer, and Director | | David C. Hastings | 62 | Chief Financial Officer | | J. Christopher Naftzger | 57 | General Counsel, Chief Compliance Officer, and Secretary | | Michael J. Sofia, Ph.D. | 66 | Chief Scientific Officer | | Karen Sims, M.D., Ph.D. | 53 | Chief Medical Officer | | Frank Torti, M.D.*† | 45 | Chairman of our Board | | Daniel Burgess*+^ | 62 | Director | | Richard C. Henriques*+† | 68 | Director | | Keith Manchester, M.D.*^ | 55 | Director | | James Meyers*+^† | 59 | Director | | Melissa V. Rewolinski, Ph.D.*† | 54 | Director |
Executive Officers and Director Nominees
| * Nominee for election to our Board |
Executive Officers and Director Nominees
| + | Member of the Audit Committee |
Executive Officers and Director Nominees
| ^ | Member of the Corporate Governance and Nominating Committee |
Executive Officers and Director Nominees
| † Member of the Executive Compensation and Human Resources Committee |
Executive Officers and Director Nominees
The following are brief biographies of nominees for the position of director: Frank Torti, M.D., Chairman. Dr. Torti has served as Chairman of our Board since November 2018. Dr. Torti has served as the Vant Chair of Roivant Sciences, Inc. (“RSI”), a wholly owned subsidiary of Roivant, since January 2020. In this capacity he serves as Chairman, CEO, or Executive Chairman of the board of directors of the biopharmaceutical companies in the Roivant family and is responsible for the operations and management of those companies. From its founding in November 2022 to the close of its sale in December 2023, Dr. Torti served as Chief Executive Officer of Telavant, which was acquired by Roche for over $7 billion. Dr. Torti previously served as Vant Investment Chair of RSI from August 2018 to December 2019. Prior to joining RSI, from August 2007 to August 2018, Dr. Torti served as a Partner of New Enterprise Associates (“NEA”), specializing in investments in healthcare. Prior to joining NEA, Dr. Torti worked for the Duke University Center for Clinical &Genetic Economics from 2002 to 2005 in various capacities, where he was involved in clinical trials research and economic evaluations of multinational clinical trials. Dr. Torti presently serves as Executive Chair of the board of directors of Immunovant, Inc. (Nasdaq: IMVT). Dr. Torti previously served on the boards of directors of Sio Gene Therapies, Inc., from September 2018 to April 2023, Urovant Sciences Ltd., from August 2018 to December 2019, and Myovant Sciences Ltd., from November 2018 to December 2019. During his career, he has served on the boards of directors of approximately thirty development and commercial stage public and private healthcare companies. Dr. Torti earned an M.D. from the University of North Carolina School of Medicine, an M.B.A. from Harvard Business School, and a B.A. from the University of North Carolina. Our Board believes that Dr. Torti’s extensive experience in healthcare investing and operations qualifies him to serve on our Board. Michael J. McElhaugh, Interim President and Chief Executive Officer and Director. Mr. McElhaugh joined Arbutus in July 2014 and has served as our Interim President, Chief Executive Officer, and Director since January 2024. Prior to this, Mr. McElhaugh served as our Chief Operating Officer from November 2022 to December 2023 and as our Chief Business Officer from December 2018 to October 2022. Mr. McElhaugh has more than 20 years of scientific, strategic, transactional, and commercial experience spanning various operating roles within the pharmaceutical industry. Mr. McElhaugh joined Arbutus when it merged with OnCore Biopharma where he was a co-founder and served as its Chief Operating Officer. Previously, from March 2012 to May 2014 he was the Director, Hepatitis C Worldwide Commercialization at Bristol-Meyers Squibb. Prior to Bristol-Myers Squibb, Mr. McElhaugh was the Director, Business Development and Market Analytics at Pharmasset, Inc. and remained in that role following the acquisition by Gilead Sciences Inc. Mr. McElhaugh also held various positions at Viropharma, Inc. and at Merck and Co., Inc. Mr. McElhaugh received his B.S. degree from St. Joseph’s University, his M.S. degree from Thomas Jefferson University and his M.B.A. degree from the Johnson Graduate School of Management at Cornell University. Our Board believes Mr. McElhaugh’s many years of experience in the life sciences industry, as well as his perspective as a founder and long-time employee of Arbutus, qualifies him to serve on our Board. Daniel Burgess, Director. Mr. Burgess has served as a director since March 2017. He is currently Chairman and Chief Executive Officer of Pulmocide Ltd. He also serves as a Venture Partner at SV Health Investors, is Chairman of the Board of Nabriva Therapeutics plc and Cidara Therapeutics (Nasdaq: CDTX) and several private biotechnology companies. Mr. Burgess is also Chairman of the Joint Oversight Board of CARB-X, a global non-profit partnership dedicated to addressing issues of anti-bacterial resistance. Prior to his current roles, Mr. Burgess was President and CEO of Rempex Pharmaceuticals, a company he co-founded in 2011 and subsequently sold to the Medicines Company in December 2013 and was acting Chief Executive Officer of Therini Bio, Inc. (2020-2021). Prior to Rempex, Mr. Burgess was President and Chief Executive Officer of Mpex Pharmaceuticals, Inc., which was acquired by Aptalis Pharma Inc. in 2011. Mr. Burgess holds a B.A. in economics from Stanford University and an M.B.A. from Harvard Business School. Our Board believes Mr. Burgess’ board, senior management and financial experience at a variety of public and private biotechnology companies and his extensive time in the anti-infective field, allows him to provide our Board with critical perspectives and qualifies him to serve on our Board. Richard C. Henriques, Director. Mr. Henriques has served as a director since December 2014. He is currently a Senior Fellow at the University of Pennsylvania with a focus on impact investing. He formerly served as Chief Financial Officer for the Bill & Melinda Gates Foundation from 2010 to 2014. In this role, Mr. Henriques was responsible for finance and accounting, financial planning and analysis, strategic planning, measurement and evaluation, program related investments and information technology. Mr. Henriques’ background includes more than 25 years working at Merck & Co., Inc. (NYSE: MRK). During this time, he served as Senior Vice President of Finance for Global Human Health, Vice President and Corporate Controller, and Principal Accounting Officer, among other roles. Mr. Henriques currently serves as a member of the board of directors for the International Vaccine Institute, The Franklin Institute, Heritage Conservancy, Delaware Canal 21 (dedicated to preserving the 60 mile Delaware Canal), and Fisherman’s Mark (providing social services in Lambertville, NJ). He also serves on the board of Cabaletta Bio (Nasdaq: CABA), which is focused on discovery and development of therapies for B cell-mediated autoimmune diseases. He holds a B.A. in Oriental Studies from the University of Pennsylvania and an M.B.A. with a concentration in Finance from The Wharton School. Our Board believes Mr. Henriques’ experience at Merck and other organizations allows him to provide our Board with critical perspectives on finance, accounting, and internal controls issues, which qualifies him to serve on our Board. Keith Manchester, M.D., Director. Dr. Manchester has served as a director since March 2015. Dr. Manchester is a partner and the Head of Life Sciences for QVT Financial LP (“QVT”), an investment firm, where he has been employed since 2005. He focuses on investments in life sciences companies. Dr. Manchester also serves as a director of Kriya Therapeutics, Inc., Roivant Sciences Ltd. (Nasdaq: ROIV) and Roivant Sciences, Inc. Dr. Manchester previously served as a director of Myovant Sciences Ltd. (NYSE: MYOV) and on the Supervisory Board of Medigene AG (OTCMKTS: MDGEF). Prior to joining QVT, Dr. Manchester was Vice President of Business Development from 2002 to 2004 and Director of Business Development from 2000 to 2002 at Applied Molecular Evolution, Inc., a biotechnology company. From 1999 to 2000, Dr. Manchester was an associate at Vestar Capital Partners, a private equity firm. From 1997 to 1999, Dr. Manchester was an investment banker in the healthcare group at Goldman, Sachs & Co. Dr. Manchester received his A.B. degree from Harvard College and his M.D. degree from Harvard Medical School. Our Board believes Dr. Manchester’s training in medicine and his business development experience, which enable him to provide our Board with insights on clinical trials, product development and strategic priorities, qualifies him to serve on our Board.
Executive Officers and Director Nominees
James Meyers, Director. Mr. Meyers has served as a director since October 2018. He also serves as a Board Member for CytomX Therapeutics (Nasdaq: CTMX) and Sangamo Therapeutics (Nasdaq: SGMO). In November 2020, Mr. Meyers became President and Chief Executive Officer of IntraBio Ltd., a privately held biopharmaceutical company with a late-stage drug pipeline that includes treatment for genetic and neurodegenerative diseases. In addition, Mr. Meyers has served as a Senior Advisor to the Boston Consulting Group since January 2019, and has served as a Senior Advisor to Gilead Sciences, Inc. (“Gilead”) (Nasdaq: GILD) since his retirement from Gilead in February 2018. During his tenure at Gilead, Mr. Meyers was one of a relatively small group of executives who were instrumental in transitioning the company from an innovative start-up to one of the most successful biopharmaceutical organizations in the world. Prior to his advisory role, Mr. Meyers served as Gilead’s Executive Vice President of Worldwide Commercial Operations, responsible for all commercial activities including pricing and market access. Mr. Meyers also led some of the most important and successful product launches in the history of the biopharmaceutical industry, most notably in the therapeutics areas of HCV and HIV. Prior to Gilead, Mr. Meyers served in roles of increasing responsibility at both Zeneca Pharmaceuticals and Astra U.S.A. Mr. Meyers also serves on the Board of Pulmocide Ltd., a privately held biopharmaceutical company focusing on the discovery and development of inhaled medicine for the treatment of life-threatening fungal and viral infections of the respiratory tract. Mr. Meyers received his B.A. in Economics from Boston College. Our Board believes Mr. Meyers’ experiences in the biopharmaceutical and healthcare industry, which allows him to contribute valuable input to our Board on our strategic and business affairs, qualifies him to serve on our Board. Melissa V. Rewolinski, Ph.D., Director. Dr. Rewolinski has served as a director since July 2023. Dr. Rewolinski has served as principal of MVR Consulting since August 2018, where she specializes in providing counsel to small and mid-size biotechnology and pharmaceutical companies. Earlier she held several senior level research and development positions for Intercept, rising to Senior Vice President, Head of Technical Operations, and was a member of the Executive Team. Previously, she served as Senior Director, Development for Amira Pharmaceuticals, and before that as a Chemical Development Group Leader and a Pharmaceutical Sciences Project Team Leader for Pfizer Global R&D. Dr. Rewolinski began her career at Pharmacia & Upjohn as a post-doctoral research scientist. She currently serves as a board member for American Type Culture Collection (ATCC) and served as a member of the board of directors of Lannett Company, Inc. from July 2019 to July 2023. Dr. Rewolinski earned a doctorate degree in organic chemistry and Bachelor of Science degree in chemistry, magna cum laude, from Rice University. Our Board believes Dr. Rewolinski’s experiences in the biotechnology and pharmaceutical industries and her research and development experience qualifies her to serve on our Board. The following are brief biographies of our current executive officers: Michael J. McElhaugh, Interim President and Chief Executive Officer and Director. Please refer to the immediately preceding section for Mr. McElhaugh’s biographical information. David C. Hastings, Chief Financial Officer. Mr. Hastings has served as our Chief Financial Officer since June 2018. Mr. Hastings has close to 30 years of executive finance and operational experience with biotech and pharmaceutical companies in various stages of development, including commercial. Mr. Hastings spent the majority of his career at Incyte Corporation (a life sciences company with a focus on oncology), where he served as Chief Financial Officer and Executive Vice President. During his time there, Mr. Hastings oversaw all financial aspects as Incyte transitioned from research and development to commercialization following the launch of Jakafi® (ruxolitinib). Mr. Hastings also previously served as Vice President, Chief Financial Officer and Treasurer of ArQule Inc., where he played an important role in ArQule’s transition into a drug discovery and development organization, and in two strategic acquisitions, including the purchase of Cyclis Pharmaceuticals Inc. Most recently, Mr. Hastings served as the Chief Financial Officer and Senior Vice President of Unilife Corporation (a medical device company) from 2015 to 2017 and as its Chief Accounting Officer and Treasurer from 2016 to 2017. Mr. Hastings was an executive officer of Unilife Corporation when it filed for voluntary bankruptcy in April 2017. Mr. Hastings currently serves on the board of directors and chairs the Audit Committees of Scynexis, Inc. (Nasdaq: SCYX). Mr. Hastings received a B.A. in Economics from the University of Vermont. J. Christopher Naftzger, General Counsel, Chief Compliance Officer and Secretary. Mr. Naftzger has served as our General Counsel, Chief Compliance Officer and Secretary since July 2023. Prior to joining Arbutus, Mr. Naftzger served as Interim-CEO, General Counsel and Corporate Secretary of Nabriva Therapeutics plc (Nasdaq: NBRV), a commercial-stage antibiotic company, from January 2023 to July 2023, and where he held various roles, including General Counsel and Corporate Secretary and Vice President, Deputy General Counsel and Assistant Secretary, since January 2017. Mr. Naftzger also has served as General Counsel and Corporate Secretary of Krystal Biotech (Nasdaq: KRYS), a gene therapy company, and Vice President, General Counsel, Chief Compliance Officer, and Secretary of Unilife Medical Solutions, a developer and manufacturer of drug delivery systems. He has held senior in-house counsel positions with Chesapeake Corporation and Koch Industries and was a corporate partner with Blank Rome LLP in Washington, DC. Mr. Naftzger obtained his undergraduate degree from Hampden-Sydney College and his law degree from the Willamette University College of Law. Michael J. Sofia, Ph.D., Chief Scientific Officer. Dr. Sofia has served as our Chief Scientific Officer since 2015. Dr. Sofia has won the Lasker-Debakey Clinical Medical Research Award for his outstanding discovery, contribution, and achievement in the field of medicine. Dr. Sofia has also won the Economist’s 2015 Innovation Award in the Bioscience category for developing a rapid cure for hepatitis C virus infection (HCV). Dr. Sofia was one of OnCore’s co-founders and served as its Chief Scientific Officer and Head of Research and Development since July 2014. He previously served as President and a member of its board of directors from May 2012 to August 2014. Since April 2012, Dr. Sofia has been a professor at the Baruch S. Blumberg Institute and since March 2013, Dr. Sofia has been an adjunct professor at the Drexel University School of Medicine. Previously, Dr. Sofia was the Senior Vice-President, Chemistry, Site Head and then Senior Advisor at Gilead Sciences, Inc. from January 2012 to December 2012. Prior to that, Dr. Sofia was the Senior Vice-President, Chemistry at Pharmasset, Inc. from August 2005 to January 2012 where he was responsible for the discovery of sofosbuvir, which ultimately resulted in the acquisition of Pharmasset by Gilead for $11 billion. From 1999 to 2005, Dr. Sofia served as a Group Director, New Leads Chemistry at Bristol-Myers Squibb. From 1993 to 1999, Dr. Sofia established and directed the research programs at Transcell Technologies, first as Director of Chemistry and then as Vice-President of Research. Dr. Sofia received his B.A. degree from Cornell University, his Ph.D. degree from the University of Illinois at Urbana-Champaign and was an NIH postdoctoral fellow at Columbia University.
Executive Officers and Director Nominees
Dr. Karen Sims, M.D., Ph.D., Chief Medical Officer. Dr. Sims has served as our Chief Medical Officer since July 2023. Dr. Sims joined Arbutus in April 2017 and has held positions of increasing seniority, including serving as Vice President, Clinical Development, before her promotion to Chief Medical Officer. Dr. Sims is a board-certified infectious disease physician with more than 13 years of industry experience in conducting and overseeing early stage through global Phase 2 clinical trials. Prior to joining Arbutus, Dr. Sims held multiple positions during her seven-year tenure at Bristol-Myers Squibb (NYSE: BMY). Most recently she served as Medical Director in the Virology and Immunoscience therapeutic areas where she oversaw Phase 1 and 2 trials in the HCV direct-acting antiviral program and several HIV discovery programs, as well as support for HIV marketed products. Previously, Dr. Sims was an Attending Physician and Instructor in Medicine at the Hospital of the University of Pennsylvania, with a focus on solid organ transplant infectious disease, HIV clinical care and translational research in lung transplantation. Dr. Sims obtained her BS in Biological Psychology at Bates College, her PhD in Neuroscience from the University of Pennsylvania, and received her MD from the University of Pennsylvania School of Medicine. Dr. Sims completed her Internal Medicine and Infectious Diseases training at the Hospital of the University of Pennsylvania.
Arrangements Between Officers, Directors and Director Nominees
Arrangements Between Officers, Directors and Director Nominees Except as set forth below, there are no arrangements or understandings between any of our executive officers, directors or director nominees pursuant to which any such person was appointed, elected or nominated, as applicable. Drs. Torti and Manchester initially were appointed to serve on our Board in connection with Roivant’s previous right to designate for nomination up to three directors pursuant to our Articles. For more information, see the “Corporate Governance – Roivant Designees” section of this Proxy Statement/Circular.
Executive Compensation and Human Resources Committee
| • | reviewing and recommending to our Board for its approval, the salary, bonus, equity compensation and any other compensation and terms of employment of our Chief Executive Officer; |
Executive Compensation and Human Resources Committee
| • | approving, as applicable, or reviewing and recommending to our Board for its approval, the salary levels, bonus plans and structures and payments thereunder and other forms of compensation policies, plans and programs for our executive officers (not including our Chief Executive Officer); |
Executive Compensation and Human Resources Committee
| • | reviewing and approving the terms of any employment agreements, severance arrangements, change of control protections and any other compensatory arrangements for our executive officers (not including our Chief Executive Officer); |
Executive Compensation and Human Resources Committee
| • | administering our equity compensation plans, pension plans, and similar programs, including the adoption, amendment and termination of such plans and any sub-plans thereof, establishing guidelines, interpreting plan documents, selecting participants, approving grants and awards, or exercising such other power and authority as may be permitted or required under such plans; |
Summary Compensation Table
Summary Compensation Table The following table provides information regarding the compensation awarded to, earned by or paid to our Named Executive Officers for the years ended December 31, 2023 and 2022. Dr. Howard was not a named executive officer for the year ended December 31, 2022; accordingly, her compensation for such year is not included in the following table. All amounts are expressed in US dollars.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | William H. Collier(5) Former President and Chief Executive Officer | 2023 | 637,100 | — | 627,850 | 1,897,476 | — | 223,558 | 3,385,984 | | | 2022 | 606,800 | — | — | 1,712,646 | 315,536 | 10,675 | 2,645,657 | | Michael McElhaugh Current Interim President and Chief Executive Officer | 2023 | 483,000 | — | 242,730 | 733,355 | 144,900 | 16,500 | 1,620,485 | | | 2022 | 448,750 | — | — | 708,610 | 147,200 | 10,675 | 1,315,235 | | Michael J. Sofia, Ph.D. Chief Scientific Officer | 2023 | 492,000 | — | 238,380 | 720,208 | 147,600 | 16,500 | 1,614,688 | | | 2022 | 468,000 | — | — | 619,775 | 149,760 | 10,675 | 1,248,210 | | Elizabeth Howard, Ph.D. Former Executive Vice President, General Counsel, Chief Compliance Officer and Secretary | 2023 | 227,423 | — | 202,130 | 610,654 | — | 802,516 | 1,842,723 | | | 2022 | — | — | — | — | — | — | — |
Summary Compensation Table
| (1) The amounts in this column represent the aggregate grant date fair value of the restricted stock unit grants, calculated in accordance with Financial Accounting Standards Board, Accounting Standards Codification (“ASC”) Topic 718. These amounts do not necessarily correspond to the actual value that may be realized by the executive in connection with his or her restricted stock unit awards. The assumptions made in valuing the restricted stock unit awards reported in this column are described in our audited consolidated financial statements (Note 13, Stock-based compensation) included in our Annual Report. |
Summary Compensation Table
| (2) The amounts in this column represent the aggregate grant date fair value of the option grants, calculated in accordance with Financial Accounting Standards Board, Accounting Standards Codification (“ASC”) Topic 718. These amounts do not necessarily correspond to the actual value that may be realized by the executive in connection with his or her option awards. The assumptions made in valuing the option awards reported in this column are described in our audited consolidated financial statements (Note 13, Stock-based compensation) included in our Annual Report. |
Summary Compensation Table
| (3) The amounts in this column represent performance bonuses earned by the Named Executive Officers in the year shown based upon the achievement of pre-established performance objectives. See “Non-Equity Incentive Plan Compensation” below. |
Summary Compensation Table
| (4) The amounts in this column for 2023 include: (i) $207,058 paid to Mr. Collier in connection with his retirement from Arbutus effective December 31, 2023; and (ii) $747,240 of severance and $5,054 of unused vacation days paid to Dr. Howard in accordance with the terms of her employment agreement upon the end of her employment with Arbutus effective July 7, 2023. Dr. Howard continues in an advisory role with Arbutus with respect to the on-going patent infringement litigations and received $48,484 for her consulting services in 2023, which is also included in this column for 2023. The amounts in this column for 2023 also include 401(k) matching contributions of $16,500 for each of Mr. Collier, Mr. McElhaugh and Dr. Sofia and $1,738 for Dr. Howard. The amounts in this column for 2022 include 401(k) matching contributions of $10,675 for each of Mr. Collier, Mr. McElhaugh and Dr. Sofia. |
Summary Compensation Table
| (5) Mr. Collier retired as our President and Chief Executive Officer, as well as one of our directors, effective December 31, 2023. |
Summary Compensation Table
| (6) Effective January 1, 2024, Mr. McElhaugh was appointed as our Interim President and Chief Executive Officer. Mr. McElhaugh was appointed as our Chief Operating Officer on November 1, 2022 and served in such capacity during the full year ending December 31, 2023. |
Summary Compensation Table
| (7) Dr. Howard retired as our Executive Vice President, General Counsel, Chief Compliance Officer and Secretary, effective July 7, 2023. |
Outstanding Equity Awards at Fiscal Year-End 2023
Outstanding Equity Awards at Fiscal Year-End 2023 The following table provides information regarding all stock options and stock awards outstanding as of December 31, 2023, for each Named Executive Officer:
Outstanding Equity Awards at Fiscal Year-End 2023
| | Stock Awards | | Option Awards | | | | | Name | Number of shares or units of stock that have not vested (#)(1) | Market value of shares or units of stock that have not vested ($)(2) | Number of securities underlying unexercised options (#) exercisable(3) | Number of securities underlying unexercised options (#) unexercisable | Option Exercise Price ($) | Option Expiration Date(4) | | Michael McElhaugh | 83,700 | $209,250 | | | | | | | | | 25,000 | — | $3.15 | 3/24/2027 | | | | | 41,268 | — | $5.20 | 4/16/2028 | | | | | 104,500 | — | $4.57 | 3/1/2029 | | | | | 191,667 | 8,333 | $3.35 | 2/17/2030 | | | | | 176,375 | 72,625 | $4.33 | 2/13/2031 | | | | | 156,136 | 169,714 | $2.81 | 1/20/2032 | | | | | 69,729 | 264,971 | $2.90 | 2/1/2033 | | William H. Collier | 216,500 | $541,250 | | | | | | | | | 1,112,000 | — | $2.18 | 6/24/2029 | | | | | 351,792 | 15,295 | $3.35 | 2/17/2030 | | | | | 251,383 | 10,930 | $3.35 | 5/28/2030 | | | | | 70,000 | — | $3.35 | 5/28/2030 | | | | | 478,125 | 196,875 | $4.33 | 2/13/2031 | | | | | 377,368 | 410,182 | $2.81 | 1/20/2032 | | | | | 180,417 | 685,583 | $2.90 | 2/1/2033 | | Michael J. Sofia, Ph.D. | 82,200 | $205,500 | | | | | | | | | 100,000 | — | $3.94 | 3/15/2026 | | | | | 150,000 | — | $3.15 | 3/24/2027 | | | | | 160,000 | — | $5.20 | 4/16/2028 | | | | | 145,000 | — | $4.57 | 3/1/2029 | | | | | 239,583 | 10,417 | $3.35 | 2/17/2030 | | | | | 205,417 | 84,583 | $4.33 | 2/13/2031 | | | | | 136,562 | 148,438 | $2.81 | 1/20/2032 | | | | | 68,479 | 260,221 | $2.90 | 2/1/2033 | | Elizabeth Howard, Ph.D. | 69,700 | $174,250 | | | | | | | | | 120,000 | — | $3.94 | 3/15/2026 | | | | | 125,000 | — | $3.15 | 3/24/2027 | | | | | 150,000 | — | $5.20 | 4/16/2028 | | | | | 137,500 | — | $4.57 | 3/1/2029 | | | | | 76,188 | 3,312 | $3.35 | 2/17/2030 | | | | | 141,667 | 58,333 | $2.81 | 2/13/2031 | | | | | 113,802 | 123,698 | $2.81 | 1/20/2032 | | | | | 58,063 | 220,637 | $2.90 | 2/1/2033 |
Outstanding Equity Awards at Fiscal Year-End 2023
| (1) The shares underlying these restricted stock units vest in three equal installments, on February 1, 2024, February 1, 2025 and February 1, 2026, subject to continued service to us through each vesting date. |
Outstanding Equity Awards at Fiscal Year-End 2023
| (2) Market Value was calculated based upon the $2.50 closing stock price on December 31, 2023. |
Outstanding Equity Awards at Fiscal Year-End 2023
| (3) Options granted after February 5, 2014 through December 31, 2019 vested (or remain eligible to vest) in thirds on each of the first three anniversaries of their grant date. Options granted after January 1, 2020 vested (or remain eligible to vest) 1/48th each month over a four-year period after the grant date. |
Outstanding Equity Awards at Fiscal Year-End 2023
| (4) Options expire 10 years after the grant date. |
Pay Versus Performance Disclosure
Pay Versus Performance Disclosure The following table sets forth information regarding the compensation actually paid to our CEO and our other Named Executive Officers compared to certain performance measures for the years ended December 31, 2023, 2022 and 2021. The disclosure included in this section is prescribed by SEC rules and does not necessarily align with how we or our Compensation Committee views the link between company performance and our Named Executive Officers’ pay. As a clinical-stage biotech company, our executive compensation program does not utilize the company’s financial results as the primary indicator to determine executive compensation. We believe that the creation of sustainable long-term stockholder value depends on our ability to successfully advance our HBV pipeline, and ultimately, bring those product candidates to market. Consequently, our Compensation Committee has designed our executive compensation program to incentivize our executive officers to create that value through the discovery and development of a robust and attractive pipeline of drug candidates. In determining the amount of the annual incentive award for each of our executive officers, including each of our Named Executive Officers but excluding Mr. Collier and Dr. Howard due to their respective terminations of employment in 2023, the Compensation Committee evaluated the corporate performance objectives that had been established at the beginning of the calendar year as well as other corporate and individual achievements and performance throughout the year. These performance objectives included clinical milestones for our lead product candidates, research and development milestones for our early-stage drug candidates and other business objectives. Additionally, grants of equity awards, primarily stock options and restricted stock units, to our executive officers are intended to incentivize future value creation and to align the long-term interests of our executive officers with shareholders. For further discussion of how the Company views its executive compensation structure, including alignment with Company performance, see page 35. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown. The “Compensation Actually Paid”, which is presented in the table below, is defined by the SEC and does not reflect amounts actually paid, earned or received by our Named Executive Officers. A significant portion of the “Compensation Actually Paid” amounts shown relate to changes in values of unvested equity awards over the course of the applicable reporting year. These unvested awards remain subject to significant risk from forfeiture conditions and possible future declines in value based on changes in our share price. The ultimate values actually realized by our Named Executive Officers from unvested equity awards, if any, cannot be determined until the awards fully vest and are exercised or settled, as the case may be.
Pay Versus Performance Disclosure
| Year | Summary Compensation Table Total for PEO(1)(2) | Compensation Actually Paid to PEO(3) | Average Summary Compensation Table Total for non-PEO NEOs(1)(2) | Average Compensation Actually Paid to non-PEO NEOs(3) | Value of Initial Fixed $100 Investment based on Total Shareholder Return(4) | Net Income/(Loss) | | 2023 | $3,385,984 | $3,268,381 | $1,692,632 | $1,594,078 | $70 | ($72,849,000) | | 2022 | $2,645,657 | $844,918 | $1,281,722 | $746,716 | $66 | ($69,456,000) | | 2021 | $3,215,289 | $3,163,642 | $1,532,848 | $1,464,749 | $110 | ($76,247,000) |
Pay Versus Performance Disclosure
| (1) For each year shown, the principal executive officer (“PEO”) was Mr. Collier, our Chief Executive Officer, until his retirement on December 31, 2023. For 2023 the other Named Executive Officers (“NEOs”) were Mr. McElhaugh, Dr. Sofia and Dr. Howard. For 2022, the other NEOs were Dr. Sofia and Mr. McElhaugh. For 2021, the other NEOs were Dr. Sofia and Mr. Hastings. |
Pay Versus Performance Disclosure
| (2) The values reflected in this column reflect the “Total” compensation set forth in the Summary Compensation Table (“SCT”) on page 35. See the footnotes to the SCT for further detail regarding the amounts in this column. |
Pay Versus Performance Disclosure
| (3) “Compensation Actually Paid” is defined by the SEC and is computed in accordance with SEC rules by subtracting the amounts in the “Stock Awards” and “Option Awards” column of the SCT for each year from the “Total” column of the SCT and then: (i) adding the fair value as of the end of the reported year of all awards granted during the reporting year that are outstanding and unvested as of the end of the reporting year; (ii) adding the amount equal to the change as of the end of the reporting year (from the end of the prior year) in fair value (whether positive or negative) of any awards granted in any prior year that are outstanding and unvested as of the end of the reporting year; (iii) adding, for awards that are granted and vest in the reporting year, the fair value as of the vesting date; (iv) adding the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value (whether positive or negative) of any awards granted in any prior year for which all applicable vesting conditions were satisfied at the end of or during the reporting year; (v) subtracting, for any awards granted in any prior year that are forfeited during the reporting year, the amount equal to the fair value at the end of the prior year; and (vi) adding the value of any dividends (or dividend equivalents) paid in the reporting year on unvested equity awards and the value of accrued dividends (or dividend equivalents) paid on performance awards that vested in the reporting year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |
Pay Versus Performance Disclosure
The following tables reflect the adjustments made to SCT total compensation to compute “Compensation Actually Paid” for our PEO and average for our other NEOs.
Pay Versus Performance Disclosure
| PEO | SCT Total Comp | Minus SCT Stock Awards and Option Awards | Plus Value of New Unvested Awards | Plus Change in Value of Prior Years Unvested Awards | Plus Value of New Vested Awards | Plus Change in Value of Prior Years Vested Awards | Equals Compensation Actually Paid | | 2023 | $3,385,984 | ($2,525,326) | $1,921,931 | $83,390 | $343,105 | $59,296 | $3,268,381 | | 2022 | $2,645,657 | ($1,712,646) | $1,165,626 | ($945,449) | $381,639 | ($689,909) | $844,918 | | 2021 | $3,215,289 | ($2,185,473) | $1,566,835 | $193,831 | $373,900 | ($740) | $3,163,642 |
Pay Versus Performance Disclosure
| Other NEOs (Average) | SCT Total Comp | Minus SCT Stock Awards and Option Awards | Plus Value of New Unvested Awards | Plus Change in Value of Prior Years Unvested Awards | Plus Value of New Vested Awards | Plus Change in Value of Prior Years Vested Awards | Equals Compensation Actually Paid | | 2023 | $1,692,632 | ($915,819) | $678,960 | $17,908 | $117,349 | $3,047 | $1,594,078 | | 2022 | $1,281,722 | ($664,192) | $422,898 | ($275,062) | $138,705 | ($157,356) | $746,716 | | 2021 | $1,532,848 | ($874,190) | $626,734 | $38,972 | $149,560 | ($9,175) | $1,464,749 |
Pay Versus Performance Disclosure
Compensation Actually Paid and Cumulative Total Shareholder Return The graph below compares the compensation actually paid to our PEO and the average of the compensation actually paid to our remaining NEOs, with our cumulative total shareholder return for the fiscal years ended December 31, 2021, 2022 and 2023. Total Shareholder Return amounts reported in the graph assume an initial fixed investment of $100 on December 31, 2020. Compensation Actually Paid and Net Loss The graph below compares the compensation actually paid to our PEO and the average of the compensation actually paid to our remaining NEOs, with our net loss for the fiscal years ended December 31, 2021, 2022 and 2023.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION To align the interests of non-executive directors with the long-term interests of Shareholders, our Board has approved the non-executive directors’ participation in our equity compensation plans, as well as an annual cash retainer. Members of our management team receive no additional consideration for acting as directors. Accordingly, Mr. Collier did not receive any compensation for his service as a member of our Board during 2023. Mr. Collier’s compensation for service as an employee for 2023 is presented above in the “Executive Compensation – Summary Compensation Table” section of this Proxy Statement/Circular.
Director Compensation Table
Director Compensation Table The following table summarizes the compensation of our non-executive directors who served during all or any portion of fiscal 2023:
Director Compensation Table
| Directors | Fees Earned or Paid in Cash | Option Awards(1)(2) | All Other Compensation | Total | | Frank Torti, M.D. | $81,250 | $106,739 | — | $187,989 | | Daniel Burgess | $55,000 | $106,739 | — | $161,739 | | Richard C. Henriques | $67,500 | $106,739 | — | $174,239 | | Keith Manchester | $50,000 | $106,739 | — | $156,739 | | James Meyers | $70,000 | $106,739 | — | $176,739 | | Melissa V. Rewolinski, Ph.D. | $22,330 | $189,756 | — | $212,086 | | Tram Tran, M.D. | $7,521 | — | — | $7,521 | | | $353,601 | $723,450 | — | $1,077,051 |
Director Compensation Table
| (1) The amounts in this column represent the full grant date fair value for awards granted during 2023, all of which were in the form of stock options. The grant date fair value of the options was computed in accordance with ASC Topic 718, Compensation – Stock Compensation. |
Director Compensation Table
These amounts do not necessarily correspond to the actual value that may be realized by the director in connection with his or her option awards. The assumptions made in valuing the option awards reported in this column are described in our audited consolidated financial statements (Note 13, Stock-based Compensation) included in our Annual Report.
Director Compensation Table
| (2) The following table shows the aggregate number of shares underlying outstanding options held by our non-executive directors as of December 31, 2023: |
Director Compensation Table
| Name | Outstanding Options | | Frank Torti, M.D. | 206,000 | | Daniel Burgess | 256,000 | | Richard C. Henriques | 236,000 | | Keith Manchester, M.D. | 275,915 | | James Meyers | 206,000 | | Melissa V. Rewolinski, Ph.D. | 110,000 |
Director Compensation Table
| (3) Dr. Rewolinski was appointed as director effective July 12, 2023. |
Director Compensation Table
| (4) Dr. Tran resigned as director effective February 26, 2023. |
Director Compensation
Director Compensation The Board believes that the level of director compensation should generally be competitive with the level of compensation paid to directors of the Company’s peer companies and that a significant component of such compensation should be tied to the performance of the Company. Accordingly, a significant portion of director compensation should be in the form of stock options and equity. The Executive Compensation and Human Resources Committee shall periodically review the compensation of non-management directors. The Executive Compensation and Human Resources Committee is encouraged to seek advice from an independent compensation consultant. After such review, the Executive Compensation and Human Resources Committee will make recommendations to the full Board, and the full Board will determine the non-management director compensation. The Company’s employee directors shall not receive additional compensation for service as directors.